Uganda has made strides in improving credit accessibility, but significant gaps persist, particularly for certain groups and sectors. Below is a concise overview of the key credit accessibility gaps in Uganda.
Who are these Groups &Sectors?
Smallholder farmers who have limited credit access for agricultural households, with weak institutional frameworks despite initiatives like the Agricultural Credit Facility.
Rural and small urban populations who lack formal banking, relying on mobile money, which rarely offers credit.
SMEs are struggling to secure loans due to weak credit infrastructure, limiting job creation.
Gender Disparities where women entrepreneurs face barriers to formal financing, stunting business growth.
High Borrowing Costs: Commercial loan rates (18.6% in 2023) make credit unaffordable for many.
Low Banking Penetration with only 35.5% of Ugandans having bank accounts; 65% lack formal credit, relying on informal sources.
Digital lending limits that see fintech focuses on consumer loans.
Progress?
· The National Financial Inclusion Strategy (2017, updated 2023) aims to reduce exclusion to 5%.
· Mobile money (43 million accounts) and agency banking expand access but lack credit focus.
· IMF’s Extended Credit Facility (US$870 million by 2024) supports financial reforms.
Challenges:
· Weak credit bureaus and collateral systems.
· High public debt (50.6% of GDP in FY2021/22) limits funding.
· External financing risks from policies like the Anti-Homosexuality Act (2023).
Recommendations:
. Expand fintech for credit.
· Promote digital lending for broader sectors.
· Address gender gaps with targeted financing.
· Boost financial literacy to improve credit use.
Uganda’s credit gaps require urgent policy and innovation to empower farmers, SMEs, women, and rural communities.
